MUFG seeks to take a 73.8% majority stake in
Bank Danamon, reaffirming Indonesia’s importance in its
regional strategy
Mitsubishi UFJ Financial Group, Inc.’s commercial banking entity
The Bank of Tokyo-Mitsubishi UFJ, Ltd. (“MUFG”) announced today
that it has entered into conditional share purchase agreements with
Asia Financial (Indonesia) Pte. Ltd. (“AFI”) and other affiliated
entities (the “Sellers”), to acquire their shareholding interests
in Indonesian bank PT Bank Danamon Indonesia, Tbk. (“Danamon”),
subject to applicable regulatory approvals. AFI is a wholly-owned
subsidiary of Fullerton Financial Holdings Pte. Ltd. The Sellers
currently hold in aggregate, 73.8% shareholding interests in
Danamon.
This strategic investment by MUFG will be executed through three
steps (the “Proposed Transaction”), and completion of the Proposed
Transaction will result in MUFG becoming the largest shareholder in
Danamon. It will also bolster MUFG’s growth strategy in Asia &
Oceania and contribute to the overall development of the Indonesian
banking sector.
Outline of Proposed
Transaction[1]:
- Step 1: MUFG will acquire an initial
19.9% stake in Danamon, based on a price[2] of IDR 8323 per share
(US$0.61) and at an investment amount of IDR 15.875 trillion (US$
1,171 million). The price was based on a 3Q17 P/B of 2.0x with
certain adjustments applied. AFI will continue to be the majority
shareholder in Danamon upon closing of Step 1, which is expected to
be within a few days.
- Step 2[2], [3]: MUFG intends to then
seek regulatory and other relevant approvals to acquire an
additional 20.1% to increase its stake in Danamon to 40% (“Step
2”). This step is expected to close between Q2 – Q3 of 2018,
subject to receiving these approvals.
- Step 3[2], [3]: Upon completion of Step
2, MUFG intends to seek the necessary approvals to increase their
stake in Danamon beyond the 40%, and this will provide an
opportunity for all other existing Danamon shareholders to either
remain as shareholders or receive cash from MUFG[4]. With the
closing of Step 3, MUFG’s final stake in Danamon is expected to be
over 73.8%.
Strategic Rationale
MUFG’s investment in Danamon represents another crucial
milestone for its strategic plans in Asia & Oceania. The bank
has greatly expanded its presence, diversified its business mix in
the region and strengthened its commercial banking business through
similar strategic partnerships with prominent banks across the
region[5]. In Indonesia, MUFG has been operating for 50 years and
currently has a full services branch in Jakarta, one sub-branch in
Surabaya, and nine service points across the country.
Indonesia is the largest economy in ASEAN underpinned by
excellent growth fundamentals including favourable demographics, a
rich resource base and stable political climate. MUFG’s investment
in Danamon is a strong testament to the bank’s optimism in the
country’s long-term prospects and commitment to the ongoing
development of the Indonesian banking sector. MUFG expects that
this investment into the country will positively contribute to the
growth of the Indonesian banking sector and economy as a whole.
MUFG will establish an integrated and comprehensive services
platform that serves as a gateway for clients wishing to make
inroads into Indonesia’s burgeoning economy as well as local
companies keen on expanding into the region. This investment will
also strategically allow MUFG to benefit from Danamon’s foothold in
the developing local retail and small and medium enterprises (SME)
segments to deepen its banking franchise in Indonesia.
Mr. Takayoshi Futae, MUFG’s CEO for Asia & Oceania region
said: “As one of the leading banks in Asia & Oceania, we have
long recognised Indonesia’s role as one of the key drivers of the
region’s development and have sought to establish a stronger
presence in the country.”
Mr. Futae added: “Danamon is a well-respected institution in the
local banking sector, renowned for its experienced and capable
management team, sound business platform and profitable franchise,
and would make a very welcome and strategic addition to the MUFG
group as we press on with our regional strategy. We are supportive
of the leadership of Danamon’s management, and are confident that
our future collaboration will create synergies that would allow us
to better serve customers and shareholders and enhance our mutual
growth.”
“As Japan and Indonesia celebrate 60 years of diplomatic
relations in 2018, this partnership is also a fitting and timely
reminder of the deep ties that exist between both countries, and we
will leverage this alliance to further intermediate business flows
between these two great nations and contribute to ASEAN’s
economy.”
For Danamon, currently the fifth most profitable Indonesian
commercial bank by earnings, the investment by MUFG will allow it
to tap on MUFG’s financial strength, relationships with Japan’s top
corporates, global network as well as product and sectorial
expertise to enhance its growth ambitions. As a supportive and
long-term shareholder, MUFG will harness Danamon’s established and
respected brand franchise to foster greater synergies and enhance
Danamon’s position as a leading and prominent Indonesian bank, one
that remains committed to delivering high quality services to its
customers.
“We are confident that MUFG coming in as a shareholder of
Danamon is beneficial to the company’s stakeholders, including its
employees, clients and customers, as well as business partners.
With deep banking expertise and international experience, we
believe MUFG is the right partner for Danamon as they embark on
their next phase of growth. Since 2003, we have been a shareholder
in Danamon and will continue to be supportive of them. We remain
invested in the company and look forward to working closely with
MUFG during this period. Indonesia is a dynamic market and we
continue to be optimistic about its growth and long term potential,
as well as that of its financial services sector,” said Mr. Tow
Heng Tan, Director, Fullerton Financial Holdings.
Notes:
[1] The Proposed Transaction is subject to regulatory and
shareholders’ approvals and has closing conditions customary for a
transaction of this nature. Shareholders are advised to exercise
caution when trading their shares.
[2] The prices for Danamon’s shares in Steps 2 and 3 will be
based on a similar approach as Step 1. There is no certainty as to
whether the price at each step will be higher, lower or the same as
the steps preceding it. The Step 2 and Step 3 prices will be
disclosed at the appropriate time.
[3] For the avoidance of doubt, in accordance with Indonesian
regulations, there will not be a mandatory tender offer in Step 2
and Step 3.
[4] Further details will be shared in due course, at an
appropriate time.
[5] MUFG has invested in a 77% stake in Bank of Ayudhya Public
Company Limited (Krungsri) in Thailand, 20% in VietinBank in
Vietnam and 20% in Security Bank Corporation in the
Philippines.
Cautionary Statement Regarding MUFG’s
Forward-Looking Statements
This communication contains forward-looking statements. We use
words such as expects, intends, and similar expressions to identify
forward-looking statements. Actual results could differ materially
from those projected or forecast in the forward-looking statements.
MUFG assumes no obligation to update the information in this
communication, except as otherwise required by law. Readers are
cautioned not to place undue reliance on these forward-looking
statements that speak only as of the date hereof.
About MUFG
Mitsubishi UFJ Financial Group, Inc. is one of the world’s
leading financial groups, with total assets of approximately US$2.7
trillion as of 30 September 2017. Headquartered in Tokyo and with
approximately 350 years of history, the Group has a global network
with over 2,300 offices across more than 50 countries. It has about
150,000 employees and close to 300 entities, offering services
including commercial banking, trust banking, securities, credit
cards, consumer finance, asset management, and leasing.
The Group’s operating companies include Bank of Tokyo-Mitsubishi
UFJ, Mitsubishi UFJ Trust and Banking Corporation (Japan’s leading
trust bank), and Mitsubishi UFJ Securities Holdings Co., Ltd., one
of Japan’s largest securities firms.
The Bank of Tokyo-Mitsubishi UFJ, Ltd. is Japan’s premier bank,
with a global network spanning around 50 countries. Outside of
Japan, the bank offers an extensive scope of commercial and
investment banking products and services to businesses, governments
and individuals worldwide.
Through close partnerships among our operating companies,
Mitsubishi UFJ Financial Group, Inc. aims to “be the world’s most
trusted financial group”, flexibly responding to all of the
financial needs of our customers, serving society, and fostering
shared and sustainable growth for a better world. The Group’s
shares trade on the Tokyo, Nagoya and New York (NYSE: MTU) stock
exchanges.
About FFH
Fullerton Financial Holdings (FFH) is a strategic and operating
investor in financial and related services in Emerging Markets. FFH
seeks to create shareholder value by being committed to building
differentiated business models focused on the Mass Market and SME
segments, and an enabler of digital innovation for our portfolio
companies. FFH is a wholly owned portfolio company of Temasek
Holdings (Private) Limited, an investment company headquartered in
Singapore. As at 31 December 2016, FFH’s total assets stood at
S$28.5 billion, and its portfolio includes investments in 10
financial institutions located in nine countries. For more
information, please visit the website
www.fullertonfinancial.com.
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version on businesswire.com: http://www.businesswire.com/news/home/20171226005141/en/
The Bank of Tokyo-Mitsubishi UFJ, Ltd.Jun Kobayashi,
+81-3-3240-1111Chief ManagerCorporate Administration Division
Mitsubishi UFJ Financial (NYSE:MUFG)
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